Published Date: 05 February 2013 Monetary Authority of Singapore
1 Acting Minister, Ministry of Culture, Community and Youth and Senior Minister of State, Ministry of Communications and Information, Mr Lawrence Wong, today moved the Insurance (Amendment) Bill for first reading in Parliament.
BACKGROUND
2 The Insurance Act is an Act for the regulation of entities carrying on insurance business in Singapore, insurance intermediaries and other insurance related companies or matters.
3 To keep pace with significant regulatory and market developments in the insurance industry, the proposed amendments to the Insurance Act aim to enhance the Monetary Authority of Singapore’s (MAS) supervisory powers, provide more clarity on its policy intent, better align the provisions with other Acts administered by MAS, and update some provisions that are outdated.
4 MAS has, over the last few years, conducted several public consultations on the proposed amendments. The last consultation in September 2012 solicited comments on the draft Insurance (Amendment) Bill. MAS had taken in the feedback received when finalising its position.
KEY AMENDMENTS
Enhancing MAS’ Supervisory Powers
5 The Bill proposes several amendments to enhance MAS’ supervisory powers. This includes, for example, powers to require an insurance branch to maintain assets in Singapore without having to cancel an insurer’s license. This would allow MAS to take prompt and pre-emptive measures for supervisory purposes. MAS will enhance its powers to approve and remove key personnel of insurers. MAS will have the power to inspect overseas branches and subsidiaries of locally-incorporated insurers for more effective supervision of cross-border insurance entities. The Bill also provides for MAS to impose conditions on insurers when MAS cancels an insurer’s licence.
Clarifying MAS’ Policy Intent
6 The Act amendments will clarify MAS’ policy intent on various issues. This includes, for example, redefining “carrying on insurance business” to be more precise about the entities that would come under the regulation of the Insurance Act. The Bill also introduces a definition of “solicitation” to give clarity on what is prohibited.
Aligning the provisions of the Insurance Act in common areas with other Acts administered by MAS
7 MAS will align some provisions of the Insurance Act with other Acts administered by the MAS to ensure consistency in its regulation of the financial sector in Singapore. For example, the Bill will introduce an appeal process for insurance licence applications that are rejected. This appeal process is currently present in the Banking Act (Cap 19) and the Securities and Futures Act (Cap 289). MAS will also enhance and align the penalties for certain offences in the Insurance Act with that of equivalent offences in the Banking Act. Another alignment with the Banking Act will be in the powers to approve or remove persons who have substantial shareholding or control of locally-incorporated insurers.
Removing or updating obsolete provisions
8 The Bill also sets out some amendments to remove or update certain provisions of the Insurance Act. MAS will remove a provision which requires proceeds from certain life insurance policies to be paid in the Singapore currency as this requirement is inconsistent with current market practice. MAS will also refine a provision to reflect that it is not the policy intent to require all life insurance policies that have been in-force for three years or more to have a cash surrender value. Term life insurance products, for example, do not have cash surrender values.